Evaluation

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Special Evaluation Study on the Effectiveness and Impact of Asian Development Bank Assistance to the Reform of Public Expenditure Management in Bhutan, India, Kiribati, and Lao People's Democratic Republic
Completed: 2000

Public expenditure management is a key instrument for ensuring sound development management and good governance.

Completed in 2000, this evaluation study was designed to analyze which aspects of the public expenditure management cycle ADB's technical assistance (TA) addresses and which approaches it uses for building capacities.

Capacity building efforts of TAs are evaluated against three main aspects:

• ownership
  
• capacity mapping or a systematic analysis of strengths, weaknesses, opportunities and threat (SWOT)
  
• implementation plan for the reform process

For evaluating the public expenditure management process, efficiency, effectiveness, transparency, and accountability are considered. The study chose a cross section of TAs from four countries (Bhutan, India, Kiribati and Lao People's Democratic Republic) as case studies for illustrative purposes.

  Major Findings

Capacity building
The TAs were successful in

• Bhutan where the TA developed a computerized tool that the staff continues to use
  
• India, where some skills were developed for analyzing state-owned enterprises
  
• Kiribati, where the foundation for macroeconomic analysis and program budgeting were laid
  
• Lao PDR, where skills were developed in macroeconomic modeling and the potential exists for the National Audit Office to function as an independent audit office.



• Ownership. The need for ownership is not explicit in the TA and depends on the efforts and attitude of counterparts and consultants during implementation. Where TAs produced a useful tool for the counterpart, ownership developed.



• Capacity mapping. This holistic perspective requires a comprehensive SWOT analysis of the capacity components and their relationships to identify the origins of shortcomings and their causes. None of the revised TAs provide details on the resources required to perform envisaged functions. Many TAs recognize in their design the need to involve more than the core agency to ensure capacity building.



• Reform process (implementation plan). The TAs involved only limited efforts to provide action plans for change that identify requisite interventions and their sequencing. The TAs focused largely on their main counterpart, which is a typical approach for institutional development rather than capacity building.

Governance: public expenditures management

• The effectiveness of the TAs was limited by their narrow approach, as complementary activities were required to gain the full potential of improving the budget cycle.



• None of the TAs took a comprehensive approach to analyzing the public expenditure management system or budget cycle as a whole and assessing it against ADB's governance criteria. As a result, the TAs addressed a variety of issues but overlooked ways in which public expenditure management as a whole can be improved.



• To achieve improved efficiency in using public resources, TAs would have had to consider several things:
  
  
  • analyzing inputs required to produce a particular output, which involves assessing the person-days or person-hours and material inputs needed to deliver a specific service or product (such analyses are time-consuming and normally done for selected services/products or processes, usually in the context of process reforms)
    
  • revising existing cost standards to reflect the actual costs
    
  • introducing evaluation capacities that assess the efficiency of a process or program

  Lessons identified

• One of the main weaknesses of the TAs in terms of capacity building is their focus on one agency.
  
• Failing to identify (through capacity mapping and SWOT analysis) and deal with inter-institutional relationships and the normative and societal contexts, the TAs are unable to generate an understanding of and plan for addressing systemic issues.

  Key recommendations

• ADB needs to devise a comprehensive approach to analyzing the budget cycle as a whole, assessing it against ADB's governance criteria and for developing public expenditure management capacities to ensure a strategic framework that promises optimal sequencing, synergy and impact of TAs.



• Capacity mapping should be the first step, after which participants determine the capacities to be built, the type and sequence of initiatives to be implemented, and the first targets and externally funded inputs needed to attain the initiatives.



• Capacity mapping cannot be attained within the framework of the typical short-duration TA fact-finding mission. Equally, building capacities requires a longer-term perspective rather than the short-term horizon of TAs.



• While indigenous capacity for managing public resources is essential, it also needs to be understood which functions the government should perform and which activities are better outsourced to consultants with the help of external assistance, particularly in countries with small administrations.



• Ideally, a reform implementation plan should contain actions that need to be taken with interim targets and be based on an understanding of which changes must be introduced first before others can be effective.